CP26/21: FCA consults on conflict-of-interest rules for listed closed-ended funds
Action required for listed investment trusts, their boards, and investment managers. Assess whether a consultation response is warranted; CP26/21 closes 14 August 2026.
Action required for listed closed-ended investment funds and their managers.
The FCA published CP26/21 on 26 June 2026, proposing targeted amendments to Chapter 11 of the UK Listing Rules (UKLR 11). The consultation closes on 14 August 2026.
The paper has three headline objectives: strengthening board independence from investment managers, applying consistent protections to all changes to investment manager fees and remuneration, and recognising conflicts of interest where a substantial shareholder is also an investment manager.
The FCA announced this targeted review of the UKLRs for investment entities on 3 March 2026. UKLR 11 already contains rules on board independence, related party transactions, and shareholder and FCA approval for material changes to investment policy. The FCA says certain gaps have emerged that targeted adjustments would close.
Who is in scope
The FCA has directed CP26/21 at: listed closed-ended investment funds and their boards and directors; investment managers, including proposed managers; substantial shareholders holding 20% or more of voting rights; sponsor firms providing fair and reasonable confirmations on related party transactions; and retail and other investors in closed-ended funds.
The conflict scenario the FCA is targeting is already live in the market. Montanaro UK Smaller Companies Investment Trust has proposed amendments to its Articles of Association specifically to ensure that where a proposed investment manager has a significant existing interest in the company, any decision on that appointment is determined by shareholders independent of the conflict. The scenario is consistent with the conflict of interest the FCA has described as the target of its proposals.
If your firm does not touch listed closed-ended investment funds in any of those capacities, nothing here requires action.
What happens next
The FCA aims to publish a policy statement and finalise rules before the end of 2026. It will also consider changes to its Technical Notes, with a timeline to be published later in the year.
What to do now
The consultation closes 14 August 2026; given the summer timing, boards and managers should assess whether a response is warranted now rather than in late July.
